The panel charged with finding $40 million in tax loopholes has presented its findings. And as some members predicted, Gov. Paul LePage is not impressed. LePage says the so-called tax expenditure review commission is proposing more tax increases, and he won't go along. Mal Leary reports.

Members of the commission recommended last week that the Legislature's Appropriations Committee look at a number of new taxes on certain recreational activities, or at expansion of some existing taxes. The group also proposes reducing the business equipment tax and business tax reimbursement programs, capping tax credits for restoring historic buildings and equalizing the sales tax charged on items sold in vending machines.

Gov. LePage says that all adds up to new taxes. "For the second time in one year, the Legislature has resorted to raising taxes," he says. "They are afraid to make the tough decisions. So, Merry Christmas Mainers."

To balance the two-year state budget, more than two-thirds of the Legislature, from both parties, voted to override the governor's veto of the increase in the general sales tax rate from 5 percent to 5.5 percent. The 7 percent tax rate on the rental of living quarters, sales of prepared food, and sales of liquor sold on premises went up to 8 percent.

LePage had proposed eliminating all revenue sharing with cities and towns, a savings worth about $200 million.

"No way on taxes," he says. "They are being hypocrites and it's a shame they are constantly avoiding making the tough decisions. It is just an awful shame that they are trying to make the middle class of Maine the welfare class. It's a shame on them."

The compromise budget that passed over LePage's veto created the commission to find $40 million in savings from eliminating or reducing tax breaks, and if lawmakers don't approve a package, municipal revenue sharing will be cut by an additional $40 million, virtually eliminating the program, according to Geoff Herman with the Maine Municipal Association.

"It is a concern if the governor believes that revenue sharing is welfare," Herman says. "He certainly didn't think that when he was the mayor of Waterville, as I understand. But in any event, revenue sharing has a very deep history in our state. It's a contract or a compact that was established in 1972 between the state and the municipalities."

Herman says the Legislature and previous governors recognized municipalities should not have to rely solely on the regressive property tax to fund needed services. Sen. Anne Haskell, a Portland Democrat, co-chaired the task force and also co-chairs the Legislature's Taxation Committee. She says the panel made many suggestions for the Appropriations Committee to consider,

"Some members of the committee wanted the report to reflect that their view was that we needed additional revenues, and if we did, there were four areas that they felt - or four areas were the ones that were talked about in the committee," Haskell says.

Republican Sen. Roger Katz of Augusta also serves on the panel. He says gutting revenue sharing simply passes the buck to local communities, and ultimately will result in increased property taxes.

But the governor says lawmakers should adopt his proposal from last session and abolish municipal revenue sharing. "You make the tough decisions," he says. "You go back to what I suggested: It's time we get rid of welfare to communities."

The Legislature's Appropriations Committee gets the package of proposals from the task force on Thursday and lawmakers reconvene on Jan. 8.